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Reporting Pensions Under GASB 68 KASBO - Spring 2014 6/7/2014.

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Presentation on theme: "Reporting Pensions Under GASB 68 KASBO - Spring 2014 6/7/2014."— Presentation transcript:

1 Reporting Pensions Under GASB 68 KASBO - Spring 2014 6/7/2014

2 KASBO - Spring 2014 6/7/2014

3 Pension debt KASBO - Spring 2014 6/7/2014

4 Authority GASB Statement 68 – Accounting and Financial Reporting for Pensions GASB 68 Implementation Guide Effective for fiscal year 2015 KASBO - Spring 2014 6/7/2014

5 Presenters Mark Whelan, CPA Chief Financial Officer, Kentucky Teachers’ Retirement System Todd Coleman, CPA Controller, Kentucky Retirement System Susan Barkley, CPA Assistant Director, Kentucky Department of Education , ext 4437 KASBO - Spring 2014 6/7/2014

6 Terminology Old New Actuarial Accrued Liability (AAL)
Unfunded Actuarial Accrued Liability (UAAL) Total Pension Liability (TPL) Net Pension Liability (NPL) KASBO - Spring 2014 6/7/2014

7 Key Changes The part of total pension liability not covered by plan assets = net pension liability (NPL) NPL is a liability on entity-wide statements Changes in calculating NPL Some components are expensed Some are deferred outflows/inflows KASBO - Spring 2014 6/7/2014

8 TPL – fair value of plan assets = NPL
KASBO - Spring 2014 6/7/2014

9 Actuarial Valuation Actuarial valuation will contain:
TPL Components of change in NPL Information needed for note disclosures Proportionate share determined by actuaries or retirement plan KASBO - Spring 2014 6/7/2014

10 Changes in NPL Most will be an expense in the period of the change
Service cost Interest on TPL Benefit changes Projected earnings on pension plan investments KASBO - Spring 2014 6/7/2014

11 Changes in NPL Some components are deferred outflow/inflow
Amortized over average of expected remaining service lives Difference between expected and actual performance Changes of assumptions Change in proportionate share Difference between proportionate share of all contributions and employer’s contributions KASBO - Spring 2014 6/7/2014

12 Investment Earnings Amortized over 5 years only
Report net deferred outflow/inflow from this component KASBO - Spring 2014 6/7/2014

13 Amortization Must track each component separately
Must track each year separately Use the appropriate time period for each KASBO - Spring 2014 6/7/2014

14 Expense over avg. remaining service period of actives and inactives
CHANGE COMPONENT FOR NPL EXPENSE DEFERRAL Service cost Immediately None Interest on the TPL Projected investment earnings Changes in benefit terms Changes in assumptions Initial period amount Expense over avg. remaining service period of actives and inactives Difference between assumed and actual economic and demographic factors Difference between projected and actual earnings Expense over 5 years Other changes in NPL KASBO - Spring 2014 6/7/2014

15 Special Funding Situation
Nonemployer contributing entity (state) Legal requirement to contribute directly Federal grants? No Districts must record revenue and expense equal to its proportionate share of state contributions – change in NPL KASBO - Spring 2014 6/7/2014

16 Fund Statements Nothing changes due to GASB 68 KASBO - Spring 2014

17 Entity-wide Statements
NPL as a liability On-behalf revenue for state contributions Deferred outflows/inflows amortized (by function) If the NPL change results in a net credit, use expense anyway, not revenue KASBO - Spring 2014 6/7/2014

18 Enterprise Funds Full accrual basis
These funds show part of NPL and other stuff on their statements, too KASBO - Spring 2014 6/7/2014

19 To Get Started in FY 15 Prior period adjustment on Statement of Activities Need beginning of year NPL (at 7/1/14) Dr. Net position (beginning) Cr. Pension liability Beginning deferred outflow/inflow can be $0 first year KASBO - Spring 2014 6/7/2014

20 Note Disclosures Lots! Descriptive information about the plan
Significant assumptions in TPL Changes of assumptions Pension expense Deferred outflows/inflows by component for this period and future periods Proportionate share information KASBO - Spring 2014 6/7/2014

21 RSI 10-year schedules Proportionate share Covered payroll
These build over time, can start FY 15 with one year Proportionate share Covered payroll Plan net position as % of TPL Show state and district shares KASBO - Spring 2014 6/7/2014

22 OPEB Not included in scope of GASB 68
Will likely be addressed in a future standard Districts will have to record it (amount paid for medical insurance fund) KASBO - Spring 2014 6/7/2014

23 KASBO - Spring 2014 6/7/2014

24 Our Plans KTRS CERS Defined benefit
Cost-sharing multiple employer plan Special funding situation State will recognize 100% of NPL Note disclosures req’d Defined benefit Cost-sharing multiple employer plan NO special funding situation Districts recognize proportionate share of NPL Note disclosures req’d KASBO - Spring 2014 6/7/2014

25 Looking Ahead CERS info will come from KRS actuaries
Expect a template to show proportionate share info January 2015 Use the FY 14 actuarial valuation for the district FY 15 financial statements KASBO - Spring 2014 6/7/2014

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